Flowserve Corp. (FLS) agreed to buy Velan Inc. (VLN.TO), a manufacturer of highly engineered industrial valves, in an all cash transaction valued at approximately $245 million or C$329 million.
The deal price includes the purchase of all of the issued and outstanding Velan equity for about $209 million or C$281 million and the assumption of approximately $36.3 million or C$48.9 million in outstanding gross debt as of November 30, 2022.
Flowserve said it will also assume Velan’s $31.4 million or C$42.2 million of cash and cash equivalents, also as of November 30, 2022.
Velan shareholders will receive C$13.00 in cash per multiple voting and subordinate voting share, representing a significant premium to Velan’s 30-day volume weighted price.
The C$13.00 purchase price per multiple voting and subordinate voting share represents a 119% premium to Velan’s 30-day volume-weighted average price per subordinate voting share on the Toronto Stock Exchange.
Following closing of the transaction, Flowserve expects to maintain a significant presence in Québec, including Velan’s Montreal, Québec head office and the combined company will continue to maintain a significant global presence.
The Transaction is expected to close by the end of the second quarter of 2023.
In a separate press release, Flowserve said it expects fourth quarter 2022 earnings per share to be in the range of $0.88 to $0.92 and adjusted earnings per share of $0.59 to $0.63. Analysts polled by Thomson Reuters expect the company to report earnings of $0.44 per share for the fourth quarter. Analysts’ estimates typically exclude special items.
Flowserve anticipates fourth quarter 2022 revenues of approximately $1 billion, representing an increase of approximately 13 percent compared to the prior year. Analysts expect revenue of $992.76 million for the fourth quarter.
Bookings for the 2022 fourth quarter are expected at $1.1 billion, or an increase of 14 percent year-over-year.
The company expects 2023 revenue growth to be in the range of 9% to 11%, earnings per share of $1.40 to $1.65 and adjusted earnings per share of $1.50 to $1.75. Analysts expect annual earnings of $1.69 per share.
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